Under pressure from lawmakers, UnitedHealthcare said it has stopped its controversial practice of dropping policyholders after they get sick, the company said Wednesday.
"In the spirit of the recently passed health reform legislation, UnitedHealthcare moved quickly to eliminate the practice of rescission, except in cases of fraud or intentional misrepresentation of material fact," Gail Boudreaux, president of UnitedHealthcare, said in a statement.
It was the first time the company had publicly admitted to the practice in the absence of outright fraud. The company also is talking to outside vendors to set up an external review process in cases where they do suspect fraud or misrepresentation.
UnitedHealthcare is the commercial insurance arm of Minnetonka-based UnitedHealth Group Inc. It does not sell commercial insurance in Minnesota.
These rescissions happen only in individual health insurance, a small but growing part of the overall insurance market. Those who get coverage through an employer cannot have their coverage pulled since the employer buys coverage as a group.
A letter arrives
UnitedHealthcare emphasized that it was ending its "limited use of rescission" well before the new health reform law takes effect in September, saying the action was consistent with its recent decision to extend existing coverage for graduating students, also ahead of the law.
A letter this week from House lawmakers might also have had something to do with it.
On Tuesday, the chairs of eight committees in the U.S. House of Representatives wrote a letter to the nation's biggest health insurers asking them to end the practice of rescission without just cause, after recent media reports of women with breast cancer who were suddenly dropped by their insurers.
It was addressed to the chiefs of seven national health insurance companies, including UnitedHealth Group Chief Executive Stephen Hemsley.
By the end of Tuesday, Indianapolis-based WellPoint Inc. said it would stop rescissions starting May 1. On Wednesday morning, UnitedHealth issued a statement saying it had already done so.
So did UnitedHealth decide to do it before or after they got the letter?
Spokesman Tyler Mason wasn't saying.
"Given the April date," Mason said, "it is safe to say that we were in sync with all efforts to foster a balanced approach."
Chen May Yee • 612-673-7434